NYSE:AJG

Stock Analysis Report

Executive Summary

Arthur J. Gallagher & Co., together with its subsidiaries, provides insurance brokerage, consulting, and third party claims settlement and administration services to entities in the United States and internationally.

Snowflake

Fundamentals

Established dividend payer with proven track record.


Similar Companies

Share Price & News

How has Arthur J. Gallagher's share price performed over time and what events caused price changes?


Latest Share Price and Events


Market Performance


7 Day Return

-0.7%

AJG

-0.01%

US Insurance

1.0%

US Market


1 Year Return

24.3%

AJG

15.1%

US Insurance

6.7%

US Market

Return vs Industry: AJG exceeded the US Insurance industry which returned 15.1% over the past year.

Return vs Market: AJG exceeded the US Market which returned 6.7% over the past year.


Share holder returns

AJGIndustryMarket
7 Day-0.7%-0.01%1.0%
30 Day1.2%-1.6%-1.8%
90 Day-4.6%-3.5%-1.8%
1 Year26.9%24.3%17.9%15.1%9.1%6.7%
3 Year89.4%76.3%42.0%31.1%46.1%36.6%
5 Year124.9%96.0%74.5%53.7%66.9%48.6%

Price Volatility Vs. Market

How volatile is Arthur J. Gallagher's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Arthur J. Gallagher undervalued based on future cash flows and its price relative to the stock market?

23.53x

Price to Earnings (PE) ratio


Intrinsic Value Based on Future Cash Flows

Undervalued: AJG ($87.98) is trading above our estimate of fair value ($74.03)

Significantly Undervalued: AJG is trading above our estimate of fair value.


Price Based on Earnings

PE vs Industry: AJG is poor value based on its PE Ratio (23.5x) compared to the Insurance industry average (15.6x).

PE vs Market: AJG is poor value based on its PE Ratio (23.5x) compared to the US market (17.5x).


Price Based on Expected Growth

Low PEG Ratio: AJG is poor value based on its PEG Ratio (2x)


Price Based on Value of Assets

PB vs Industry: AJG is overvalued based on its PB Ratio (3.4x) compared to the US Insurance industry average (1.2x).


Next Steps

Future Growth

How is Arthur J. Gallagher expected to perform in the next 1 to 3 years based on estimates from 8 analysts?

11.6%

Forecasted annual earnings growth


Earnings and Revenue Growth Estimates


Future Annual Growth Analysis

Earnings vs Savings Rate: AJG's forecast earnings growth (11.6% per year) is above the savings rate (2.7%).

Earnings vs Market: AJG's earnings (11.6% per year) are forecast to grow slower than the US market (14.5% per year).

High Growth Earnings: AJG's earnings are forecast to grow, but not significantly.

Revenue vs Market: AJG's revenue (5.6% per year) is forecast to grow slower than the US market (7.3% per year).

High Growth Revenue: AJG's revenue (5.6% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Estimates


Future Return on Equity

High Future ROE: AJG's Return on Equity is forecast to be low in 3 years time (12.4%).


Next Steps

Past Performance

How has Arthur J. Gallagher performed over the past 5 years?

18.3%

Historical annual earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

Earnings Trend: AJG's earnings have grown by 18.3% per year over the past 5 years.

Accelerating Growth: AJG's earnings growth over the past year (20.7%) exceeds its 5-year average (18.3% per year).

Earnings vs Industry: AJG earnings growth over the past year (20.7%) exceeded the Insurance industry 3.1%.


Return on Equity

High ROE: AJG's Return on Equity (14.9%) is considered low.


Return on Assets

ROA vs Industry: AJG has a higher Return on Assets than the Insurance industry average last year.


Return on Capital Employed

ROCE Improving: AJG's Return on Capital Employed has declined over the past 3 years.


Next Steps

Financial Health

How is Arthur J. Gallagher's financial position? (This company is analysed differently as a bank or financial institution)


Financial Position Analysis


Debt to Equity History and Analysis


Balance Sheet

Inventory Level: AJG has a low level of unsold assets or inventory.

Debt Coverage by Assets: AJG's debt is covered by short term assets (assets are 2.156580x debt).


Financial Institutions Analysis

Asset Level: AJG's level of assets compared to its equity is low.

Allowance for Bad Loans: Insufficient data to determine if AJG has a sufficient allowance for bad loans.

Low Risk Liabilities: AJG reports no customer deposits, loans are made up entirely of externally borrowed funds.

Loan Level: Insufficient data to determine if AJG has an acceptable proportion of non-loan assets held.

Low Risk Deposits: AJG has advanced significantly more loans than the customer deposits it holds.

Level of Bad Loans: Insufficient data to determine if AJG has an appropriate level of bad loans.


Next Steps

Dividend

What is Arthur J. Gallagher's current dividend yield, its reliability and sustainability?

2.05%

Expected Dividend Yield


Dividend Yield vs Market

company2.0%marketbottom25%1.5%markettop25%3.8%industryaverage2.2%forecastin3Years2.0%

Current dividend yield vs market & industry


Dividend Yield and Payments Analysis

Notable Dividend: AJG's dividend (1.95%) is higher than the bottom 25% of dividend payers in the US market (1.46%).

High Dividend: AJG's dividend (1.95%) is low compared to the top 25% of dividend payers in the US market (3.77%).

Stable Dividend: AJG's dividends per share have been stable in the past 10 years.

Growing Dividend: AJG's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (44.9%), AJG's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: AJG's dividends in 3 years are forecast to be well covered by earnings (42% payout ratio).


Next Steps

Management

What is the CEO of Arthur J. Gallagher's salary, the management and board of directors tenure and is there insider trading?

12.8yrs

Average management tenure


CEO

Pat Gallagher (67yo)

24.8yrs

Tenure

0

Mr. J. Patrick Gallagher, Jr. also known as Pat, serves as the Chief Executive Officer and President of Gallagher Koster (alternate name, Koster Insurance Agency, Inc.) and VEBA Service Group, LLC. Mr. Gal ...


CEO Compensation Analysis

Compensation vs. Market: Pat's total compensation ($USD0.00) is too low to compare against companies of similar size in the US market ($USD11.20M).

Compensation vs Earnings: Pat's compensation has increased by more than 20% in the past year.


Management Age and Tenure

12.8yrs

Average Tenure

57yo

Average Age

Experienced Management: AJG's management team is seasoned and experienced (12.8 years average tenure).


Board Age and Tenure

10.4yrs

Average Tenure

68yo

Average Age

Experienced Board: AJG's board of directors are seasoned and experienced ( 10.4 years average tenure).


Insider Trading

Insider Buying: AJG insiders have only sold shares in the past 3 months.


Recent Insider Transactions

SellUS$204,39021 Aug 19
Kay McCurdy
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares2,250
Max PriceUS$90.84
SellUS$207,00031 Jul 19
Kay McCurdy
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares2,250
Max PriceUS$92.00
SellUS$102,13205 Jun 19
William Bax
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares1,200
Max PriceUS$85.11
SellUS$167,73703 Jun 19
Susan Pietrucha
EntityIndividual
Shares1,990
Max PriceUS$84.29
SellUS$66,46407 May 19
Frank English
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares800
Max PriceUS$83.08
SellUS$396,82819 Feb 19
David Johnson
EntityIndividual
Role
Lead Director
Lead Director
Shares5,000
Max PriceUS$79.74
SellUS$85,42607 Feb 19
Frank English
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares1,100
Max PriceUS$77.66
BuyUS$292,80021 Dec 18
Thomas Gallagher
EntityIndividual
Role
Senior Key Executive
Corporate VP and President of Global Property & Casualty Brokerage
Shares4,000
Max PriceUS$73.20

Ownership Breakdown


Management Team

  • Pat Gallagher (67yo)

    Chairman

    • Tenure: 24.8yrs
  • Doug Howell (57yo)

    Corporate VP & Chief Financial Officer

    • Tenure: 16.5yrs
    • Compensation: US$4.19m
  • Sean Connelly (52yo)

    Global Chief Information Officer and Corporate Vice President

    • Tenure: 4.4yrs
  • Tom Gallagher (60yo)

    Corporate VP and President of Global Property & Casualty Brokerage

    • Tenure: 2.8yrs
    • Compensation: US$4.51m
  • David Long (67yo)

    Vice President

    • Tenure: 0yrs
  • Richard Cary (56yo)

    Chief Accounting Officer

    • Tenure: 0yrs
  • Walt Bay (56yo)

    Corporate VP

    • Tenure: 12.8yrs
    • Compensation: US$3.11m
  • Ray Iardella

    Vice President of Investor Relations

    • Tenure: 3.8yrs
  • Scott Hudson (57yo)

    Corporate VP

    • Tenure: 0yrs
    • Compensation: US$3.18m
  • Patrick Gallagher

    Executive Vice President of Midwest Region

    • Tenure: 0yrs
    • Compensation: US$8.06m

Board Members

  • Pat Gallagher (67yo)

    Chairman

    • Tenure: 24.8yrs
  • Sherry Barrat (69yo)

    Independent Director

    • Tenure: 6.3yrs
    • Compensation: US$260.41k
  • David Coldman (71yo)

    Independent Director

    • Tenure: 4.9yrs
    • Compensation: US$240.41k
  • David Johnson (63yo)

    Lead Director

    • Tenure: 3.8yrs
    • Compensation: US$270.41k
  • Kay McCurdy (68yo)

    Independent Director

    • Tenure: 14yrs
    • Compensation: US$255.41k
  • Richard Cary (56yo)

    Chief Accounting Officer

    • Tenure: 0yrs
  • Bill Bax (75yo)

    Independent Director

    • Tenure: 13yrs
    • Compensation: US$265.41k
  • Norman Rosenthal (68yo)

    Independent Director

    • Tenure: 11.8yrs
    • Compensation: US$240.41k
  • Frank English (73yo)

    Independent Director

    • Tenure: 10.4yrs
    • Compensation: US$240.41k
  • David Jack

    Chairman of Technical Advisory Board

    • Tenure: 4yrs

Company Information

Arthur J. Gallagher & Co.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Arthur J. Gallagher & Co.
  • Ticker: AJG
  • Exchange: NYSE
  • Founded: 1927
  • Industry: Insurance Brokers
  • Sector: Insurance
  • Market Cap: US$16.370b
  • Shares outstanding: 186.07m
  • Website: https://www.ajg.com

Number of Employees


Location

  • Arthur J. Gallagher & Co.
  • 2850 Golf Road
  • Rolling Meadows
  • Illinois
  • 60008
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
AJGNYSE (New York Stock Exchange)YesCommon StockUSUSDJun 1984
GAHDB (Deutsche Boerse AG)YesCommon StockDEEURJun 1984
0ITLLSE (London Stock Exchange)YesCommon StockGBUSDJun 1984
AJG *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNJun 1984

Biography

Arthur J. Gallagher & Co., together with its subsidiaries, provides insurance brokerage, consulting, and third party claims settlement and administration services to entities in the United States and inter ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/10/14 01:19
End of Day Share Price2019/10/11 00:00
Earnings2019/06/30
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.

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